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JPMorgan (JPM) to Pay $200M Fine for Record-Keeping Lapses
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JPMorgan (JPM - Free Report) will be paying $200 million as a fine to the U.S. regulators – the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). The company has been accused of “widespread and longstanding failures” to preserve employee communications on personal mobile devices, messaging apps and e-mails.
Of the total amount, JPMorgan has agreed to pay $125 million to the SEC and the remaining to the CFTC. Also, the company admitted to the lapses.
Charges
Per the regulators, JPMorgan allowed its staff to use WhatsApp and other communication platforms on their personal devices, and failed to preserve the offline communications in a violation of the federal securities law.
Per federal laws, it is mandatory for financial firms to maintain an electronic record of all the conversations between the clients and the financial institutions. This ensures that the firms are not breaking the law.
Per the SEC, JPMorgan, while admitting to the accusations, had known of these lapses from at least January 2018 through November 2020. On the other hand, the CFTC findings showed the company employees (including those senior positions), at least since July 2015, had been “communicated both internally and externally on unapproved channels.”
None of these communications were preserved by the company and were not furnished promptly to the regulators when requested. Sanjay Wadhwa, Deputy Director of Enforcement, said, “As today’s order reflects, JPMorgan’s failures hindered several Commission investigations and required the staff to take additional steps that should not have been necessary.”
Remedial Measures
Under the terms of the agreement between JPMorgan and the regulators, the company has decided to appoint a compliance consultant. Also, the company must conduct a complete evaluation of “its policies and procedures relating to the retention of electronic communications found on personal devices.”
Price Performance & Zacks Rank
JPMorgan’s shares have rallied 21.1% so far this year, underperforming 30.3% growth for the industry.
Image Source: Zacks Investment Research
JPMorgan currently carries a Zacks Rank #3 (Hold).
Over the past year, shares of Fifth Third Bancorp have jumped 52.9% and Wells Fargo surged 61.8%. Further, the Zacks Consensus Estimate for earnings for FITB has moved 2.7% north, while the same for WFC has been revised almost 1% upward, over the past 60 days.
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JPMorgan (JPM) to Pay $200M Fine for Record-Keeping Lapses
JPMorgan (JPM - Free Report) will be paying $200 million as a fine to the U.S. regulators – the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). The company has been accused of “widespread and longstanding failures” to preserve employee communications on personal mobile devices, messaging apps and e-mails.
Of the total amount, JPMorgan has agreed to pay $125 million to the SEC and the remaining to the CFTC. Also, the company admitted to the lapses.
Charges
Per the regulators, JPMorgan allowed its staff to use WhatsApp and other communication platforms on their personal devices, and failed to preserve the offline communications in a violation of the federal securities law.
Per federal laws, it is mandatory for financial firms to maintain an electronic record of all the conversations between the clients and the financial institutions. This ensures that the firms are not breaking the law.
Per the SEC, JPMorgan, while admitting to the accusations, had known of these lapses from at least January 2018 through November 2020. On the other hand, the CFTC findings showed the company employees (including those senior positions), at least since July 2015, had been “communicated both internally and externally on unapproved channels.”
None of these communications were preserved by the company and were not furnished promptly to the regulators when requested. Sanjay Wadhwa, Deputy Director of Enforcement, said, “As today’s order reflects, JPMorgan’s failures hindered several Commission investigations and required the staff to take additional steps that should not have been necessary.”
Remedial Measures
Under the terms of the agreement between JPMorgan and the regulators, the company has decided to appoint a compliance consultant. Also, the company must conduct a complete evaluation of “its policies and procedures relating to the retention of electronic communications found on personal devices.”
Price Performance & Zacks Rank
JPMorgan’s shares have rallied 21.1% so far this year, underperforming 30.3% growth for the industry.
JPMorgan currently carries a Zacks Rank #3 (Hold).
Major Bank Stocks Worth a Look
Two major banks worth considering are Fifth Third Bancorp (FITB - Free Report) and Wells Fargo (WFC - Free Report) . Both FITB and WFC at present carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past year, shares of Fifth Third Bancorp have jumped 52.9% and Wells Fargo surged 61.8%. Further, the Zacks Consensus Estimate for earnings for FITB has moved 2.7% north, while the same for WFC has been revised almost 1% upward, over the past 60 days.